Debt consolidation, as the name itself suggests, is a means of consolidating or combining a number of debt liabilities into a single loan and therefore serves as a means of easing debt. Debt consolidation creates a greater ease in debt repayment by lowering or fixing of the interest rates and because of the convenience of servicing only one loan payment. However, it should be clearly identified that consolidation of debt is a means of coming out of debt and not a downright solution to debt.
Debt consolidation lowers the interest rate and spreads the loan over a longer duration of time and hence allows the borrower to deal with his/her budget more effectively. Debt consolidation has, with time, gained importance in the global economic scenario attributing to the benefits it provides to the borrowers. Although debt consolidation is a household requirement, however, it has turned into a profitable business these days with various institutions and companies providing debt consolidation services. There are a number of debt consolidation companies and institutions that offer various debt consolidating loans as per individual requirements.
With such mushrooming of debt consolidation companies, it becomes necessary to distinguish between fair and unfair companies and institutions. Accreditation by a national agency plays an important role here by certifying trustworthy debt consolidating agencies. For example, in the United States, Better Business Bureau (BBB) is one of the nation’s top consumer protection and advocacy bodies. It operates throughout US and Canada and has listed certain principles which need to be met by debt relief companies to earn its accreditation.
Some of the debt relief companies accredited by BBB are Prosper, Consolidated Credit Counseling Services, Cambridge Credit Counseling, National Debt Relief, Debt Consolidation Care, CareOne Debt Relief Services, and Superior Debt Relief. With a prominent presence of Debt consolidation companies, there exists strong regulation and investigation of these companies and agencies. The United States’ Department of Justice maintains a list of approved Credit Counselling Agencies by state and judicial district.
Companies offering Debt consolidation
Some details about the companies:
Prosper : Prosper is one of the pioneers of peer- to peer lending in America. It claims to have over 2 million members with a total funded loans of $1, 00,00,00,000. Borrowers make loan requests to prosper ranging from $2, 000 to $35, 000 and Prosper allows its individual investors to make lending for an amount as small as $25. Prosper provides a platform to borrowers to list their needs for funds which are viewed by the investors. An agreement is reached upon once there is mutual consensus between the needs of the borrower and lender.
Consolidated Credit Counseling Services : This is one of the largest credit agencies that provide debt management services and credit counselling all across the United States. This company aims to help its customers by personalising the credit programs as per the individual needs of the borrower and advising them as to how can funds and finances are better managed.
Cambridge Credit Counseling : This agency was established in 1996 as a non- profit housing counselling and Credit Company. The agency focuses on providing financial literacy and credit counselling to people in the nation. The agency is actively functional in money management services, financial education and advice.
National Debt Relief : National Debt Relief is known to be the one of the county’s most reputed companies for debt settlement. The company’s mission is to help people stuck in financial crisis with not just debt relief, but also financial education and literacy to re-establish financial stability in the lives of its customers.
Debt Consolidation Care : This Company offers a wide variety of consolidation and relief options for different types of debts. The growing importance and popularity of this debt relief agency can be attributed to the wide range of debt relief instruments that this agency offers to its customers according to their individual needs.
CareOne Debt Relief Services : This agency works with the objective of turning debt free dreams of its customers into reality. This agency also offers personalized debt relief options to its customers to come out of debt with greater ease and in the minimum amount of time.
Superior Debt Relief : This debt relief and consolidation agency deals not only with making debt repayment easier for its customers, but also negotiates with the creditors to reduce the repayment amount to its maximum potential level. Generally, a debtor can have his/ her debt amount reduced by 40 to 50 percent by using this agency’s services.
United Credit Solutions : This agency focuses on aggressive elimination of debt by the effective tools that it uses. It also has an adverse attitude towards bankruptcy and hence, has devise instruments to avoid it in every possible circumstance. The agency deals with eliminating credit card debt, unsecured credit lines, medical bills collection et cetera.
Debt Settlement of America : This agency also prefers to avoid bankruptcy in every possible circumstance and aims to eliminate credit card and unsecured debts in a time period of about 2 to 3 years. It also works towards reducing the amount of loan and making it even easier to pay off debt.
Trident Debt Solutions : This debt relief agency is specialised in credit card loan negotiations. The agency carries an A+ rating from the BBB and claims to be one of the top debt relief agencies of the country that works with the creditors to get their customers out of debt in the most effective manner.
Student loan programme that was initially started in response to Soviet Union’s launch of Sputnik Satellite has now come to dominate the education scenario in the US with more than $1.2 trillion student debt accumulating in the economy (according to the Consumer Financial Protection Bureau). With such huge dependence on student loans, a need was felt by the policy makers for favourable repayment options to repay these loans.
There are numerous options available for students looking for options to repay their student loans such as income driven repayments, debt consolidation et cetera. What is important for each individual is a clear understanding of their current and future financial situation. A prudent borrower is in a better position to select the best suited plan and company to repay the student debt. These private companies are especially very helpful for people who cannot avail federal financial help for their student loans.
Helping students in loan repayment solves the twin objective of alleviating financial burden from the borrowers as well as helping the economy recover most loans by avoiding instances of default.